Tencent, Hon Hai Ride AI Wave As China-US Tech Rivalry Grows

Tencent Holdings Ltd. and Hon Hai Precision Industry Co. are expected to show how stronger AI demand lifted earnings, signaling optimism for Asia's broader ambitions in the field amid a tug-of-war for AI dominance against US rivals.

With a deep pool of customer data, Tencent is set to dominate AI in China, ahead of Baidu Inc., Bloomberg Intelligence said. The group's ability to incorporate AI across its platforms and rely on it for cost savings gives it a "solid" position in China's cloud computing industry, providing an additional route to market and revenue source.

Hon Hai set the tone after posting an 11% jump in October sales, saying it expects operations to maintain sequential quarterly growth. The Nvidia Corp. server-maker sees stronger sales underpinned by continued ramp up in AI server shipments and as information and communication technology products enter the traditional second-half peak period.

Over in Chinese e-commerce, JD.com Inc. is set to report as price wars with Meituan and Alibaba Group Holding Ltd. take hold. Competing for consumers has weighed on margins and triggered a $27 billion August selloff in the trio. With China issuing measures to curb price wars last month, investors will be watching for signs of easing rivalry, but it's not expected to materialize given that competition is currently the main engine of demand, BI said.

Monday: ANZ Group's (ANZ AU) second-half earnings will include a one-time charge totaling A$1.1 billion ($713 million). Underlying operating expenditure may turn out to be below management guidance given the recent focus on cost resets, Citi said.

Tuesday: Sony Group (6758 JP) likely saw a decline in quarterly operating profit, weighed down by US tariffs and weaker PlayStation console and game sales. Its music and picture businesses should have held up well, supported by new hit content including Demon Slayer and Fate/Grand Order, BI said.

Wednesday: Hon Hai's (2317 TT) cloud and networking segment growth likely outpaced all other units last quarter, as demand for its AI servers remained strong. Its smart consumer electronics business could be weaker due to subdued sentiment, though Apple Inc.'s upbeat iPhone guidance should lift longer-term outlook, BI said.

Thursday: Tencent (700 HK) is expected to deliver strong third-quarter earnings, driven by continued momentum in AI development. Despite ongoing geopolitical uncertainties, the tech giant remains better positioned to navigate these challenges compared to its e-commerce peers, BI said.

Friday: MUFG (8306 JP), SMFG (8316 JP) and Mizuho Financial (8411 JP) likely saw earnings rise on higher rates, stronger lending and elevated capital markets amid a benign credit backdrop, BI said. Japan's fiscal stance under new Prime Minister Sanae Takaichi could be positive for banks, Mizuho CEO Masahiro Kihara told Bloomberg.

Source: Bloomberg Europe